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Black workers experience what is known as a "high-beta" effect across the business cycle. They are hit harder during recessions but benefit more from the momentum of a recovery, especially during particularly strong economic periods. For three years preceding the COVID-19 recession, the United States was enjoying what has been referred to as a "hot" economy. During this time, Black workers regained some of the ground lost in labor market outcomes during the Great Recession, relative to white workers. The sudden onset of the COVID-19 recession reversed that progress. Even though the Congressional Budget Office projects the U.S. economy to regain its hot status as early as 2024, the negative impact of the COVID-19 recession could linger.

Key findings:

  1. The unemployment rate gap between white and Black workers declined during the hot economy of 2017–19.
  2. The positive influence of the hot economy is expected to continue into the COVID-19 recession.
  3. The negative influence of the COVID-19 recession is expected to be felt by Black workers even once it concludes.

Center for Human Capital Studies

JEL classification: E24, E60, J64

Key words: labor market disparities, labor market gaps, unemployment, racism, hysteresis


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